As Gov. Maura Healey’s 2027 budget proposal molds fiscal futures across municipalities, questions have risen surrounding the future of local aid and sustainability of state spending.
Healey filed the $63 billion proposal — a 3.8 percent increase that outpaces inflation — in late January. The budget for the 2027 fiscal year, which starts on July 1, 2026, was shaped with the goal of increasing affordability for Massachusetts residents amid sweeping federal funding cuts, according to a Jan. 28 press release from Healey’s office.
“Uncertainty remains high this year due to continued instability at the federal level,” wrote Rep. Dave Rogers in a statement to YourArlington. “In light of that uncertainty, I believe the governor’s proposal is a sound starting point.”
“It’s a balanced budget,” said Doug Howgate, president of the Massachusetts Taxpayers Association. “It’s a budget that I think manages some challenging conditions in an understandable way.”
The budget proposes dedicating $10.4 billion to local aid, roughly $438.5 million, or 4 percent, more than what was allocated in the current fiscal year.
The aid package would include a $242 million increase in Chapter 70 education aid and a $33 million hike in unrestricted general government aid, or UGGA— flexible funds municipalities can spend as they see fit.
“It is hard to say whether that is the same amount we will see once the House and Senate finish their changes, but I consistently make this funding a top priority,” wrote Rogers.
Arlington is expecting a 2.09 percent overall increase in revenue from state aid, which includes a 2.49 percent increase in UGGA and 1.78 percent increase in education aid, according to Town Manager Jim Feeney.
“While we recognize the revenue forecast is not particularly strong, we will advocate for our legislators to incorporate the proposed UGGA appropriation into the final budget, as well as increase Chapter 70 per pupil minimum aid if at all possible,” wrote Feeney in a statement to YourArlington.
Modest spikes in local aid
After property tax, which makes up nearly 75 percent of Arlington’s revenue stream, state aid is the town’s second largest source of income.
“Comprising 13 percent of the Town’s revenue, it has a sizable impact on the amount of the override being asked of the voters,” wrote Feeney.
Arlington is expecting its sixth tax override this year. On March 28, voters will be asked to approve another permanent hike in property taxes beyond the state-mandated 2.5 percent annual cap. The Select Board set the ballot question at $14.8 million for three years.
If state aid increased by 4 percent in the 2027 budget — nearly double what is being proposed — the dollar amount asked of voters would decrease by roughly $500,000, Feeney wrote.
“The variability in state aid year over year presents a challenge for municipalities like Arlington, which plan multi-year overrides as the amounts cannot be reliably predicted,” he added.
The Select Board will continue to monitor the municipal budget on the assumption that state aid will grow “conservatively” in coming years, wrote Feeney.
In a report last December, the Massachusetts Municipal Association suggested a $351 million increase — a far cry from Healey’s proposed $33 million — in unrestricted aid to municipalities could palliate the fiscal “perfect storm” hitting Massachusetts towns and cities.
“We’re very thankful for the governor’s proposed targeted investments in education, rural schools, special education, and roads and bridges through a separate transportation bill,” said MMA Executive Director Adam Chapdelaine, according to a Jan. 28 press release. “We appreciate her proposal for Unrestricted General Government Aid, which we see as a starting point for a continuing conversation, given the overwhelming need for essential municipal services.”
Rogers emphasized the “critical role” unrestricted aid plays in municipal finances.
“[Healey’s] proposed budget also includes increases in Chapter 70 and 90 funding,” he wrote. “This may take some of the pressure off cities and towns and allow UGGA funding to be spent where it is most needed.”
Concerns regarding unrestricted aid stretch beyond volume. Some have highlighted issues surrounding the strategy behind UGGA distribution, or rather, the lack of one.
“There is currently no real rhyme or reason to how much municipalities get, aside from what they got last year, plus a certain level of inflation,” said Howgate.
A quarter century ago, the state blended two local aid programs — Lottery Aid and Additional Assistance — to create one unrestricted aid scheme. The combination of formulas from the two parent programs determined how UGGA was distributed in its first years.
The blueprint has not been updated since.
“It really has no basis in any of the metrics you would use to create a formula now,” said Howgate.
While municipalities with lower property values and incomes tend to receive more unrestricted aid, the “connection between economic need and local aid is loose and inconsistent,” according to a Massachusetts Budget & Policy Center report published last year.
Rogers said the municipalities he represents — Cambridge, Belmont and Arlington — congregate in the “middle of the pack” when it comes to the amount of unrestricted aid they receive.
While the Senate sought to include a clause establishing a commission to study the distribution method in last year’s budget, it was ultimately cut out, according to Rogers.
“I would support the inclusion of this language in the House’s FY 27 budget,” he wrote. “Certainly, there are some indications that the UGGA formula needs to be revised.”
While climbing costs heighten the need for local aid across municipalities, some worry heightened spending levels could worsen the state’s fiscal outlook.
Curbed spending amid soaring healthcare costs
While Healey’s budget proposal takes strides to rein in state expenditures, spending levels are still expected to exceed tax revenue growth, according to MTF.
“There has been increasing pressure put on the budget, on the fiscal stability of the budget, through spending levels that are growing at a pace faster than a sustainable level of revenue collections,” said Howgate.
The budget proposes a 3.8 percent increase in spending, with tax revenue projected to grow by 2.4 percent in FY 2027. The divergence could exacerbate budget shortfalls over time, making the state increasingly vulnerable to economic downturns.
“The mismatch between those two numbers starts you off with a bit of a challenge,” said Howgate, adding the state’s priority should be tamping down spending, not raising new revenues.
Healey’s budget proposes efforts to lower state expenditures on MassHealth, which include gutting coverage for GLP-1 weight loss drugs and capping dental benefits at $1,000 annually. It allocates the program $22.7 billion for the 2027 fiscal year, a 1 percent year-over-year increase.
Skyrocketing health care costs continue to strain budgets nationwide. The recent expiration of Affordable Care Act tax credits has driven up health insurance premiums nationwide, imposing a significant financial burden on residents across the state.
“In recent years, MassHealth spending growth has been driven by dramatic sector-wide health care cost growth,” according to a Jan. 28 press release from Healey’s office. “These spending challenges have been made worse by President Trump and Congressional Republicans stripping Massachusetts of billions of federal health care dollars.”
Roughly 17 percent of residents in Middlesex county, home to Arlington, relied on MassHealth in 2023.
Arlington’s healthcare insurance expenses in the 2027 fiscal year are projected to rise “considerably,” said Feeney during the Jan. 26 Select Board meeting. The current estimate is an 11.25 percent spike.
“[Healthcare insurance] has been particularly problematic for the town’s budget over the past couple of years, as premiums have been increasing at a double-digit clip,” said Feeney. “Preliminarily, we are expecting that again in fiscal year 2027.”
This news story by Leia Green was published on Feb. 18, 2026.
